Subcommittee on Oil and Gas and Other Energy Prices committee  Sure. As I said in my opening statement, there is a supply and demand issue. You have fundamental issues and you've had two shocks. Think about the last 12 months, when oil prices moved from $70 to $150 and back to $110. Obviously fundamentals haven't changed that much in the last 12 months for supply and demand.

Subcommittee on Oil and Gas and Other Energy Prices committee  Yes, it's fairly simply. The world is divided in two, if you want. You have what I would call the OPEC and non-OPEC countries. Inside the non-OPEC countries is where production has really not been increasing over the last five years—or you had an increase in Russia and a decline pretty much everywhere else.

Subcommittee on Oil and Gas and Other Energy Prices committee  I'll go back to what Mrs. Russell said, that we removed the speed bumps; we removed the speed bumps in the United States. And the question is—and there has been a lot of discussion on this in the United States, where Mr. Masters and I have been quite involved—how do you put back the speed bumps to make sure that you basically look at these markets and understand what is going on?

Subcommittee on Oil and Gas and Other Energy Prices committee  I want to make the same point. We have a tremendous increase in oil prices, but we haven't seen supply increasing. So we are not in a situation right now where we are misallocating in a big way. What high prices have done is reduce demand, and it's painful for consumers. But from the point of view of public policy in the United States in particular, it's probably a good thing.

Subcommittee on Oil and Gas and Other Energy Prices committee  I agree. I think the refining business has been terrible for the last 25 years, except for the last three or four years. You had excess capacity, and the problem in the refining business is that once you build it, it's there forever. It doesn't waste...as you do for the upstream.

Subcommittee on Oil and Gas and Other Energy Prices committee  I'm not particularly well aware of the Canadian market; I work mostly here in the United States. But I imagine that hedge funds and pension funds have replicated what American, European, Asian, and Middle Eastern pension funds have done. Unless there is a legal reason in Canada not to be able to do that, I imagine they have done what their counterparts have done.

Subcommittee on Oil and Gas and Other Energy Prices committee  Well, yes and no. I mean, there are short-term events. There is a very big storm in the Caribbean coming toward Louisiana, and you have a long holiday here--Monday is closed--so the market is preparing for a potential big disruption. You have to be careful about these small movements.

Subcommittee on Oil and Gas and Other Energy Prices committee  Yes, it's certainly profitable.

Subcommittee on Oil and Gas and Other Energy Prices committee  Good afternoon. Thank you for giving me this opportunity. What I want to talk about is price formation in the oil market and how we got from $20 to $140 and back down to $120. What's important to know is that the oil market, between 1985 and 2003, had a very large “spare capacity”, unused capacity.

Subcommittee on Oil and Gas and Other Energy Prices committee  Yes, I can hear you very well. Thank you.